Re-emergent house flippers are set to flop.
By Elliott Wave International
In 2005, a mania for residential real estate reached such a fever pitch that a series of cable television shows became entirely devoted to house "flipping."
Flipping involves buying a worse-for-wear house, making the minimum repairs necessary, then turning right around and selling it - ideally for a fast and
handsome profit.
Two years before the housing bust became painfully obvious to U.S. homeowners, EWI's publications warned subscribers that the housing market
had reached extremes and was about to bust.
There's no mistaking it now: Extreme psychology ... has taken up residence in real estate. ...
A significant percentage of the population does not know that a return to earth is implicit in [real estate's] pole-vault to record heights.
The Elliott Wave Financial Forecast, July 2005
That issue published around the time the S&P Supercomposite Homebuilding Index peaked.
The index bottomed in late 2008. Since then, the index moved
sideways into late 2011 and in 2012 staged a modest rebound.
Take a look at this chart from the November Financial
Forecast (wave labels removed):
The outburst of over-the-top enthusiasm for home buying turned out to be a great sell signal. The Homebuilding Index lost more than 85% over
the next 40 months. The rise from its November 2008 low appears to be a ... countertrend rally. ... Near-term excitement has definitely risen.
Financial Forecast, November 2012
As you might expect, the rebound is accompanied by a rise in expectations for a real estate recovery.
The head of the world's largest asset management firm sees more than just higher home prices ahead; he sees a return to 2005 levels.
As the inventory of unsold U.S. homes drops to a more manageable level, the U.S. housing industry is inching closer to a
complete rebound, [said] BlackRock CEO.
CNBC, Oct. 4
By looking at the chart, you can see how much farther prices have to climb before achieving a "complete rebound."
What's more, home flippers have returned.
Property Flippers Are Back as Housing's Middle Men
Yahoo Finance, Oct. 15
Is it safe again to speculate in U.S. real estate? How should
you handle loans and other debt? Should you rely on the government
agencies to protect your finances? You can get answers to
these and many more questions in Robert Prechter's Conquer
the Crash. And you can get 8 chapters of this landmark
book -- free. See below for details.
 |
8 Chapters of Robert Prechter's Conquer the Crash -- FREE
This free, 42-page report can help you prepare for your financial future. You'll get valuable lessons on what to do with your pension plan, what to do if you run a business, how to handle calling in loans and paying off debt and so much more. Get Your FREE 8-Lesson "Conquer the Crash Collection" Now >> |
This article was syndicated by Elliott Wave International and was originally published under the headline The Expected Housing Recovery Faces a Brick Wall. EWI is the
world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to
institutional and private investors around the world.
The whole global economy is facing a brick wall. The brick wall has been erected by all the QE and cheap money: artificially low interest rates. The can they have been kicking down the road is breaking apart and the "brick wall" is just ahead!
Off topic, what ever happened to the charts? When clicking on the indexes it no longer displays the charts!?
Please don't tell me THAT we have to subscribe to get the charts!?
B
We are working with our data provider to restore or data this am. Charts should be up soon.
Thank you for your patience,
Jeremy
We had a momentary outage of our US equity feeds this morning. All is recovered and restored and working fine. Let us know if you have any other issues.
Thank you very much gents, TGIF
Likewise! Enjoy your weekend.
Subscribe. It is truly worth it. Follow the rules and you could make your money back ten fold.